Novartis AG (NYSE:NVS) stock rose 0.95% (As on Feb 3, 12:26:20 AM UTC-4, Source: Google Finance) after the company missed the analysts’ expectations for the fourth quarter of FY 21. Operating income was USD 2.6 billion (-3%, -1% cc) as higher sales were more than offset by higher M&S and R&D investments and lower gains from divestments, financial assets, and contingent considerations. Net income was USD 16.3 billion, benefiting from the Roche divestment gain of USD 14.6 billion. Core operating income was USD 3.8 billion (+9%, +12% cc) driven by higher sales, partly offset by higher investments in M&S and R&D. Core operating income margin was 28.9% of net sales, increasing by 1.5 percentage points (+1.6 percentage points cc). Free cash flow amounted to USD 3.0 billion (-9% USD), compared to USD 3.3 billion in the prior year quarter. As of December 31, 2021, the net debt decreased to USD 0.9 billion compared to USD 24.5 billion at December 31, 2020.
NVS in the fourth quarter of FY 21 has reported the adjusted earnings per share of $1.40, missing the analysts’ estimates for the adjusted earnings per share of $1.42. The company had reported the adjusted revenue growth of 6 percent to $13.23 billion in the fourth quarter of FY 21, missing the analysts’ estimates for revenue of $13.25 billion. This is driven by volume growth of 11 percentage points, including 1 percentage point relating to a reclassification of contract manufacturing from other revenues to sales. Volume growth was partly offset by price erosion of 3 percentage points and the negative impact from generic competition of 2 percentage point.
Moreover, Innovative Medicines net sales were USD 10.7 billion (+5%, +7% cc) with volume contributing 11 percentage points to growth, including 1 percentage point relating to contract manufacturing revenue reclassification. Sandoz net sales were USD 2.5 billion (0%, +2% cc) with volume contributing 11 percentage points to growth, including 1 percentage point relating to contract manufacturing revenue reclassification. Pricing had a negative impact of 9 percentage points. Sales in Europe grew +4% (cc), while sales in the US declined -8% (cc). Global sales of Biopharmaceuticals grew to USD 555 million (+8%, +11% cc) across all regions.
The Swiss drugmaker expects 2022 group sales and core operating income to grow mid-single digit in 2022. Innovative Medicines Sales expected to grow mid single digit and Sandoz sales expected to be broadly in line with prior year.